Though there are many ways to approach innovation, the majority of companies focus on building innovation teams or “Innovation centers of excellence,” as well as fostering internal education, before moving toward external deployments.
In Crowd Companies’ recent report, The Corporate Innovation Imperative (download here), we identify 10 types of innovation programs corporations pursue when looking to evolve their business models, customer experiences, operations, or products and services. More on the 10 programs can be found here. We discovered that corporations often excel in one program initially, then add programs to their innovation portfolio as they mature and are able to justify related expenditures.
And, where do they begin? With their own teams. Through our survey, we found that dedicated innovation teams (79%), innovation “centers of excellence” (61%), and technology education / university partnerships (54%) are the most commonly deployed corporate innovation programs (see figure below). This shows that companies are first focusing internally on building the right teams, getting governance and processes in place, and educating current and new employees on emerging technologies before spending time and resources on rolling out external programs or investing in the startup scene.
Frequency of Corporate Innovation Programs
One way corporations are focusing on building strong teams is by involving cross-departmental constituents in their efforts. This smooths the path to internal acceptance and adoption as advocates are in every corner of the organization.
Much of the success of innovation teams depends on internal alignment among tangential departments, like legal and marketing, to move from ideation through implementation. Verizon recommends bringing new ideas and developments to lawyers early, who can help obtain and protect intellectual property rights in a fast-changing global legal landscape. Innovation teams should also have their own marketing and PR resources, as Mastercard Labs does, to socialize ideas internally and externally, when appropriate, pick up sponsorship, build momentum, and identify pilot customers. Mastercard Labs also produces its own 60-second “pitch” videos for each idea that makes it to prototype, as an easy way to promote viral sharing within the company.
How is your company approaching corporate innovation? Are you looking to build teams and foster education before looking outward to bolster innovation?
By Jeremiah Owyang, with co-contributor Ryan Brinks
Corporations are approaching innovation processes and methods in different manners, we’ve seen catalogs of over 70 examples. Here’s a sample of the most common methods that we’ve commonly heard in our interviews from our recent report on the Corporate Innovation Imperative (download). Feel free to leave comments below with a design process or method that you feel if valuable, and explain why.
In summary, here’s the most commonly discussed and adopted versions, both in a high-level table below, then summaries below with a diagram
Guide to Innovation and Design Methods
||1956 by Herbert D. Benington
||Teams work independently on each stage
||2008 by Eric Ries
||Low investment to test the market
||1969 by Herbert Simon
||Creative, unconventional solutions
||Forces exploration of ideas beyond the familiar
||2001 by the writers of the Agile Manifesto
||Can quickly and easily adapt to project changes
||2010 by Jake Knapp
||Produces a tested prototype in just one week
||1981 by Hideo Kodama
||Direct digital-design-to-prototype approach
Known for a traditional method, it’s best suited to products for which the customer’s needs and expectations are well defined, the waterfall design methodology flows sequentially through six stages of development, completing one milestone before reaching the next. Waterfall design begins by understanding the context surrounding the problem to be solved and forming boundaries within which the solution must exist. Next comes the theoretical design of the product itself, followed by prototyping and testing. The fifth stage is packaging and delivery, and the final consideration is ongoing maintenance and customer service. “Even though there are newer and sexier development processes available, most projects are still probably using some version of this approach to deliver their projects,” TechRepublic stated.
Example: Acme project leaders sit down to interview a corporate client and agree on requirements for the project. They then instruct the design team to produce plans, which are prototyped and tested. From there, designs are tweaked, the prototype refined, and more testing conducted until the product is launched. Post-deployment, customer service keeps tabs on issues and ongoing maintenance.
Rather than presume to know what customers need and want, the lean startup design methodology helps innovators focus on a disciplined management process that transforms an idea into a product by circling around and around three core principles: build, measure, and learn. This process begins by solving the problem with a basic, unrefined minimum viable product (MVP). The development team can then test the MVP internally and externally with a focused group of target customers. The feedback and learning then feed back into a new round of refinements, tests, and feedback. Soon the product is spiraling along an ever-rising and broadening helix that exposes it to better technology and more customers. “By the time that product is ready to be distributed widely, it will already have established customers,” TheLeanStartup.com states. “It will have solved real problems and offer detailed specifications for what needs to be built.”
Example: As soon as a product idea is formulated, Acme’s build team puts together a rough working MVP and passes it along for testing and exposure to a focus group of customers. Based on tests and feedback about the potential for the MVP, the build team reworks or refines the MVP and presents it for another round of testing and customer feedback. Eventually, early versions of the product gain momentum with beta testers, and their feedback defines the direction of future enhancements.
The design thinking methodology encourages exploration of unconventional solutions by forcing innovators to go beyond their instincts and experience. Design thinking starts with the challenge of defining not just any problem but the right problem, and that requires developers to leave the comfort of stereotypes and theories to confront the realities of their customers’ situations and habits. It also involves intense questioning of every perspective. To then solve the right problem, a diverse team must be disciplined enough to push past the solutions that come easily and propose many other, often more creative, possibilities. From there, the team experiments freely with the most promising ideas until a winner emerges that can ultimately be prototyped and tested. “Design thinking,” according to Fast Company, “describes a repeatable process employing unique and creative techniques which yield guaranteed results — usually results that exceed initial expectations. Extraordinary results that leapfrog the expected.”
Though more ambiguous than other methodologies, Agile represents any methodology that’s focused on creating products in a way that quickly adapts to ever-changing needs, demands, ideas, and technologies. At the core of Agile is a set of four guiding values and 12 principles. Being Agile means prioritizing individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following a plan. This is typically accomplished by breaking projects into small pieces and conducting short-term iterations that move products along one goal at a time. Between iterations, teams have the opportunity to act on feedback, re-prioritize goals, etc.
Design sprints are five-day shortcuts to solving big problems or tapping new markets through high-level idea prototyping. Developed by the minds behind Google Ventures, “the sprint gives you a superpower: You can fast-forward into the future to see your finished product and customer reactions before making any expensive commitments.” Google Ventures outlines the design sprint process by day: “On Monday, you’ll map out the problem and pick an important place to focus. On Tuesday, you’ll sketch competing solutions on paper. On Wednesday, you’ll make difficult decisions and turn your ideas into a testable hypothesis. On Thursday, you’ll hammer out a high-fidelity prototype. And on Friday, you’ll test it with real live humans.”
With the rise of 3D printing has come the emergence of rapid prototyping, which transforms digital CAD designs directly into functional prototypes or concept models. The rapid prototyping process accelerates testing, cuts out wasted time and resources, and leads to earlier detection of important product flaws or issues. It can also allow for wider experimentation of different manufacturing materials, including photopolymers, thermoplastics, metals and composites. Rapid prototyping can even engineer the tooling or molds needed for large-scale production.
Summary: Choose a design method that suits your need.
What’s most interesting is that very advanced companies like WL Gore train and educate all their employees on a common innovation framework (in this case, Lean Startup method) and encourage all teams to approach, measure, and even report up on this method. I personally care less about which method you choose, as long as it’s the right one for the business and encourages a culture of innovation beyond just pockets of labs. Lastly, we found that many agencies, consulting firms and innovation boutique companies have their own permutations of the following methods, which they rebrand and package up for their clients. Here’s a sample of a few processes that we’ve observed, feel free to leave a comment with additional versions, below.
Photo credit: pexels
Most large corporations have a wide range of customer types. It often spans many countries, languages, and cultures. To help create the right product solutions for your customers, savvy companies are activating their employees (not just the dedicated product team) to unleash innovation from all areas of the company, which results in a diverse set of product ideas.
Yesterday, I spoke at the executive track at the Inclusion Conference in SF to about a hundred Chief Diversity Officers from some of the largest corporations in the world. I was honored to be join by my fellow speakers included Allison Wiener of Clorox, Sandy Carter, Ted Childs, and Pat Waders of Linkedin. I presented three case studies on how MasterCard, Adobe, and Cisco are activating thousands of employees to generate tens of thousands of ideas, many of which go to market.
These “Intrapreneur” programs, which engage employees in their jobs to come up with new ideas, spur new forms of creativity, and generate new ideas that the product teams may not have the bandwidth to produce. Furthermore, this engages employees (esp job hopping younger folks) to quickly make a difference in their job. Over ten years ago we saw “idea” generation websites emerge at Dell, Salesforce, and Starbucks to enable employees to bring ideas forth.
Now, at companies like Adobe, we’re seeing formalized programs emerge with training, executive support, and even a cute “kickbox” which includes documents, energy bars and drinks, and a credit card with a modest amount of money to get an experiment going. By the way, Adobe has open sourced Kickbox, you can download the program and apply it to your own company.
I’ve embedded my slides from the presentation below. I’d love to hear how your company is enabling your employees from all walks of life to generate ideas –Crowd Sourcing ideas doesn’t just come from customers and partners –but also from your own employees.
Intrapreneruship programs are one of ten Corporate Innovation programs companies are launching, learn about all ten in our latest report, the Corporate Innovation Imperative. Thank you Jaimy Szymanski, Adobe, Mastercard, and Cisco for the data, and to Sandy Carter (read her book on innovation) for the invite to speak.
Corporate innovation programs are primarily measuring revenue to show success –but that’s a risk, it a small incubated program is being compared to the primary billion dollar business lines. ROI is a fallacy metric of corporate innovation. Basing program success on ROI too early, rather than dedicated innovation KPIs, will not yield an accurate representation of progress.
In our recent Crowd Companies research, “The Corporate Innovation Imperative” (available for download here), we found there is a startling chasm between what organizations are measuring around innovation and which KPIs truly indicate program success from infancy through maturity. Corporate innovators who implement realistic measurement plans that focus on innovation KPIs, not immediate ROI, find greater executive support and are given adequate time to deliver results.
Our survey data of corporate innovation leaders reveals that the most common metric attached to innovation program success is increased revenue (66%), Other top measures of success include greater customer satisfaction (54.5%) and faster time to market for new products or improvements (45.1%) (see figure below for full list of innovation metrics).
Top Innovation Success Measures
Companies should focus on measurment depending on which phase of their innovation cycle they’re at. Lookoing at the classic Agile Startup methodology put forth by Eric Reis, companies (large and small) can focus on innovation metrics (usage, renewal, referral) in addtion to raw revenues.
Though innovators report increased revenue as an indicator of success, mature corporations reveal that focusing on ROI over other growth KPIs is actually harmful to innovation, and that programs should first encourage speed to market and increased ideas cycling through the pipeline. Migros, one of our interviewees, monitors KPIs of possible yield models instead of revenue for its innovation programs, with agreed-upon guardrails like maximum accepted expenditure per year and total investment volume over a period of time. It also plans out expectations for when innovations will break even in order to set realistic measurement goals and act accordingly if and when they are or aren’t achieved.
As companies climb the ladder of maturity, they also begin to clarify which of the four innovation goals (product innovation; operations; CX; or business model) they’re setting out to achieve (see figure below) — both within each program individually and in their innovation charter for the company overall. This impacts the metrics they attach to signal progress. When pursuing a new corporate innovation program, setting clear goals that answer “why this program?” is paramount to choosing the right initiative.
Corporate Innovation Impacts Customers in Four Ways
Advanced companies build their capacity for innovation by approaching innovation goals separately at first (avoiding the trap of too-early ROI expectations), each with its individual programs and support mechanisms. Then, as the corporation matures in its efforts, its programs will strategically progress to fulfill all four innovation goals within a culture of innovation that serves as the lifeblood of the organization.
For example, each of the above innovation goals have different associated KPIs for each, for example Product Innovation will be focused on usage, revenue, and referral, Operational Innovation may focus on reduced costs, higher quality, or faster time to market, Customer Experience innovation may focus on customer satisfaction, engagement, and reduced contact center costs, and Business Model Innovation will focus on newly generated ideas, avoiding disruption or partnerships with young startups.
(Photo via pexels)
Corporate innovation leaders face many challenges when attempting to get innovation programs off the ground. Peter Schwarzenbauer, chairman of BMW (a Crowd Companies member), is quoted saying, “Innovation is a willingness not to be understood for a long period of time.”
Change agents are those whose radical, innovative ideas are not internally understood –and the culture of the company resists change that could conflict with existing business models. In our research, we tested to see if technology adoption, relationship with startups, or if understanding new trends would have been a primary cause of challenges –yet over and over, we heard that internal culture was the primary issue.
[Ironically, most Corporate Innovation leaders had more challenges with internal culture –rather than combating disruptive startups from the outside]
As part of Crowd Companies’ research for “The Corporate Innovation Imperative” (available for you to download here), we surveyed individuals responsible for innovation within their organizations. Survey results (below) show that the top innovation challenges include: fostering an internal culture of experimentation and innovation (57%); juggling competing internal agendas and goals (56%); overcoming the middle management “permafrost” layer (45%); and moving forward despite deferred commitment and delayed action (33%).
(Above graphic is from report: Corporate Innovation Imperative, download on slideshare)
Top Innovation Challenges:
Our research also included interviews with innovation leaders and strategists from large corporations. During our interviews, we uncovered two additional challenges: keeping up with startup innovations and a steering progress with a lack of clear business goals.
- Foundational culture change is required to make significant progress.
Innovators first focus on internal education as a catalyst for cultural change, from external speakers to internal workshops, first at the executive level and then targeted toward other senior leadership. Innovation excursions are also helpful in the initial stages of program development to align executives and teams around what’s possible.
- Middle management “permafrost” doesn’t support innovation.
A symptom of a culture resistant to innovation is a middle management layer that can only see short-term goals, not long-term change. As a result, they encourage employees to operate efficiently within their current roles and responsibilities by meeting consistent benchmark metrics. This doesn’t leave room for the innovators to explore new ideas. We heard this middle management layer called everything from the “frozen tundra” to the “permafrost” to the “antibodies.” It’s critical for senior leadership to embrace innovation from the top down, so middle management is empowered to support innovative employees without fear of retribution.
- Startups innovate quickly, leaving corporations playing catch-up.
Many companies are burdened with complicated processes, long production cycles, and bureaucratic red tape for moving forward with new ideas. These hindrances stand in direct contrast to the countless nimble startups swiftly prototyping and executing ideas that directly compete with slower-moving enterprises. Innovators commonly turn to educational workshops (in-house or at vendor locations) and university partnerships to speed internal innovation, as well as innovation outposts.
- Companies lack clear business goals for innovation programs.
Corporate innovation leaders, who we’ve published more data about their role here, are tasked with tying programs to business metrics and proving ROI to executives, yet they often lack the budget needed to adequately resource said programs to an extent that generates results. There is hope for innovation, though. Our survey revealed four innovation programs with more clearly defined business goals: dedicated innovation teams, innovation outposts, innovation “centers of excellence,” and startup investment programs. Mature companies are even defining innovation goals by individual program, while simultaneously laddering metrics up to overarching departmental and company KPIs.
Companies need to clear the obstacles for Corporate Innovation leaders.
The Corporate Innovation teams are often struggling with internal conflicts –more than combating external startups. When I’ve spoke to these leaders, they are willing to risk their jobs to make a change to help innovate their employer, some said “I’m banking on my employability, not my employment” as they knew they could get jobs elsewhere if it didn’t pan out. It’s key that management help offer them a road towards innovation success. Also, read Steve Blank’s list of the 13 things companies are doing to hamper innovation, or Stefan Petzov of Swisscom’s post on corporate challenges.
(Photo from Cindy Chen)
Experience and Education Set the Foundation for Leadership.
This is a detailed breakout from our recent report on the Corporate Innovation Imperative, over the coming months, more will be revealed about how large companies are behaving like startups –while using their unique capabilities as a large organization.
Attracting the right talent for innovation is a challenge for corporations competing with shiny, agile startups, as is long-term employee retention. Innovative corporations are building innovation talent pools by offering interesting programs, intrapreneur growth, and worthwhile incentives. Because, without a focus on attracting and maintaining innovation leaders, corporations are left seeking a hero to guide their journey toward change.
(Above graphic, from the recent report The Corporate Innovation Imperative, download the partial version as full version is for Crowd Company members.)
In the report, we analyzed more than 140 LinkedIn profiles of individuals responsible for corporate innovation in varied industries and countries in order to create a persona of the average corporate innovation leader. Use these characteristics to guide your hiring and talent acquisition process, as well as gauge when leaders may be seeking opportunities for advancement or new challenges.
The term “Tundra” emerged as a common theme among corporate innovation leaders, as they described company culture, and specifically, middle management as the “frozen middle layer” or “Tundra” or other similar metaphors of a dense, rigid, cold layer. A more biological metaphor included “antibodies” that are designed to raise barriers to corporate risk. These are very creative, passionate, and motivated professionals.
Key Stats of the Corporate Innovator Persona:
- Time spent in current role: 3.2 years. This shows that innovators need to know the business, as well as internal stakeholders, before generating new ideas. They must have credibility to sell up to executives. Many were recently hired from the outside, to shake up the inside, some have entrepreneurial backgrounds.
- Duration of career: 18.6 years. Corporate innovation leaders aren’t fresh out of college. Rather, they have the experience and know-how to align minds and departments around change. Corporate innovation programs often rock the boat, and change agents need to have direct experience steadying the mast and pushing forward. Much of the success of innovation teams depends on internal alignment among tangential departments, like legal and marketing, to move from ideation through implementation.
- Number of industries in career: 3. With experience comes a desire for variety. Our research uncovered that throughout their careers, corporate innovation leaders will apply their learning to further multiple areas of the business ecosystem.
- Percentage with “innovation” in title: 61%. Not only do the majority of leaders have “innovation” in their current title, but 40% also had it in their previous role. This indicates that innovation requires a groundswell before reaching a level where resources are allocated toward dedicated leadership. This slow growth trend of innovation leaders reaching senior levels is also reflected in the fact that only 4% have the title of “Chief Innovation Officer.”
- A highly educated cohort: 46% have an advanced degree. With age and experience often comes higher educational degrees, as is reflected in our finding that nearly half of corporate innovation leaders tout at least a master’s degree.
Mature corporations understand that an innovation program is only as good as the employees behind it. Follow in the footsteps of corporations like Verizon, which has multiple innovation teams in various business units, each with talented members dedicated to both ideation and execution. This helps them move efficiently to prototype and launch new innovations.
Also focus on talent retention, as there’s a commonplace and ever-present threat that your best and brightest will be poached (or, at the very least, approached) by competing corporations or startups. Leaders at mature organizations consistently ask themselves, “Are we doing enough to keep our most innovative employees happy?” The most effective incentives tie employee progress on innovation KPIs directly to pay structure.
I’ve even heard from these innovation leaders, that they’re willing to risk their jobs at their companies to make significant changes, despite butting up against the culture of non-change. One leader commented “I’m backing on my employability –not my employment” when I take risks. This entrepreneurial mindset is a key one to properly manage, and clear internal roadblocks for if an employer wants to retain these go-getters.
If you want to connect with fellow corporate innovation leaders, we, at Crowd Companies have hundreds of members that have this specific role, in our peer to peer council, who meet at our events, online, and beyond.